Hong Kong stocks drifted lower on Tuesday amid thinner trade, while Shanghai shares also eked out gains, as cautious traders refrained from making big bets before a Federal Reserve meeting that is widely expected to result in an interest rate rise.

The Hang Seng Index bounced between small gains and losses during the day, before closing almost flat at 23,927.95, down 1.72 points or less than 0.1 per cent.

In the meantime, the Hang Seng China Enterprises Index, or the H-shares index, rose 0.6 per cent or 56.52 points to end at 10,315.23. Turnover dropped to HK$72 billion from HK$86 billion on Monday.

“The focus is the Fed’s meeting this week. It’s almost certain that a rate increase will take place. But the key is whether the Fed will give a forecast of rate rises this year,” said Su Peihai, an analyst for Guangzheng Hang Seng Securities.

“Investors are holding their breath,” he added.

The focus is the Fed’s meeting this week. It’s almost certain that a rate increase will take place. But the key is whether the Fed will give a forecast of rate rises this year. Investors are holding their breath

Su Peihai, an analyst for Guangzheng Hang Seng Securities

“Hong Kong stocks will face downward pressure if the Fed signals quicker rate rises in their meeting tomorrow,” said Stanley Chan, director of research at Emperor Securities.

The Federal Reserve is scheduled to kick off a two-day policy meeting on Wednesday and announce its decision on Thursday.

Markets expectations for a 25-basis-point rate increase stood at 93 per cent, according to the FedWatch tool from the CME Group on Tuesday.

In the mainland, the Shanghai Composite Index closed marginally higher after seesawing trade.

It rose 2.31 points to finish at 3,239.33.

However, the large-cap CSI 300 Index was down 1.41 points at 3,456.69. The Shenzhen Component Index dropped 0.3 per cent to finish at 10,531.73. The Nasdaq-style ChiNext fell 0.7 per cent to 1,958.02.

Combined turnover for Shanghai and Shenzhen markets fell 3 per cent to 460 billion yuan from the previous day.

The sectors were boosted by a set of upbeat economic data released on Tuesday.

Fixed asset investment accelerated in the first two months of the year, up 8.9 per cent year-on-year, government statistics showed. Industrial output also grew more than expected by 6.3 per cent during the same period.

Chinese property developers also jumped, as China Vanke gained 4.2 per cent to 21.57 yuan, and China Calxon Group rose 3.1 per cent to 8.26 yuan.